Caution to Surrogacy Agencies

Insurance Dispute Involving Surrogacy Agency

In December 2017, there was a recent report of a California surrogacy agency’s commercial liability policy denying coverage to defend a negligence action against the surrogacy agency for a lawsuit brought by intended parents who sued the agency because their child was born with a rare eye disease.

The reason the commercial liability company denied coverage is because the surrogacy agency received notice from the intended parent’s lawyer that they were intending on suing the agency before applying for the new liability policy, and when the agency applied for new commercial liability insurance with their now current company, they failed to disclose the prior letter the agency had received from the intended parents’ lawyer.

The application for the policy asked whether the agency was “aware of any act, error, omission, fact, circumstance, or records request from any attorney which may result in a malpractice claim or suit?” The surrogacy agency responded that they were not aware of any actions on the application. The commercial liability company’s position was that the surrogacy agency knew about a potential malpractice claim, failed to disclose it, and therefore the commercial liability company refused to defend the negligence action against the surrogacy agency.

For further details on this report involving a surrogacy professional liability insurance issue, Click Here.

I wanted share this article so that other surrogacy agencies, even Florida surrogacy agencies, can learn from this issue to best protect their business.

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